U.S. home prices increased 0.4% in November compared with October and were up 5.1% compared with November 2017, according to CoreLogic’s home price index.
However, the rate of appreciation is slowing and will continue to slow in the months to come. The software, data and analytics firm predicts home prices will rise by 4.8% by November 2019.
What’s more, the firm is forecasting that home prices will decrease 0.8% in December – the first month-over-month drop in years.
A drop in home prices would help stimulate a sluggish housing market – as would a decrease or flattening of mortgage rates, which continued to rise in November but fell slightly in December.
“The rise in mortgage rates [in November] dampened buyer demand and slowed home-price growth,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “Interest rates for new 30-year fixed-rate loans averaged 4.9 percent during November, the highest monthly average since February 2011.
“These higher rates and home prices have reduced buyer affordability,” Nothaft adds. “Home sellers are responding by lowering their asking price, which is reflected in the slowing growth of the CoreLogic Home Price Index.”
November marked the eighth consecutive month of slowing annual HPI growth.
North Dakota was the only state to see a year-over-year decrease in home prices, while Idaho and Nevada showed double-digit growth.
As of November, roughly 35% of metropolitan areas had an overvalued housing market, CoreLogic says. Of the 100 largest cities, 27% were undervalued and 38% were at value.